Countries in the East African Community have adopted new Common External Tariff (CET) import duty measures that seek to protect local industries from cheap imports. The new import taxes took effect on July 1, raising import duty for some products to shield domestic industries, while lowering import duty on critical inputs.
Currently, the CET stands at 25% for finished goods, 10% for intermediate products, and 0% for raw materials.
Categories of the import duty measures include the Duty Remission for Industrial Inputs, Stays of Applications, and Amendments of the East African Community Customs Management Act, 2004.
Under Duty remissions, local manufactures can import raw materials not available in the region at lower rates. According to the East African Business community CEO Dr. Peter Mathuki, this provision will only apply to gazetted manufacturers who will apply to import specific amounts of imports at lower rates.
“The duty remission measures adopted by the EAC Partner States will ensure that local manufacturers can import raw materials and inputs which are not available in the region at a lower rate,” Mathuki said in a Statement.
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Stay of Application allows EAC partners to agree on a CET on the final product to stimulate local production. Countries can apply a higher rate than the CET on products like garments, leather shoes and belts, processed tea, coffee, cocoa, edible oil, iron sheets, and metal products to protect local production. In this case, Kenya will maintain an EAC CET 25% duty on margarine and edible mixtures for a year. However, the country will apply a 35% import duty for clothing apparel, both knitted and crocheted for a year as they are sensitive to the country. Most countries in the region have applied duty rates between 35% and 60%, showing a common need to protect industries, and therefore review the CET.
Noting that the EAC cannot manufacture everything, Stay of Application allows countries to set duties lower than the CET on products like mobile phones, wheat, and sugar.
Individual Country Import Duty Could Prevent Uniform Policy.
Nevertheless, Mathuki believes that different stays of application could prevent the region from developing a uniform policy governing imports into the region. Further, it will prevent products that benefit from a uniform EAC CET from accessing the area at a preferential tariff. Mathuki, therefore, recommends a review to fastrack a harmonized CET.